Under Soleimani’s system, individual users will be responsible for marking out which other depositors they do not want to be associated with. In practice, he imagines that will mean using blacklists compiled by companies like Nansen, which monitors public blockchains for criminality.
In theory, such a design would also limit the amount of funds tied to criminal activity that pass through the mixer, he claims, “because everyone else using it will have the option to isolate [criminal addresses],” reducing the size of the pool in which bad actors can hide.
The system wouldn’t mean that criminals couldn’t operate on the mixer, only that they wouldn’t be able to access its full liquidity.
Soleimani says that an alternative system, where an administrator maintains a blocklist to bar bad actors from the platform entirely, would be prohibitively expensive because adding addresses to a blockchain-hosted list comes at a cost each time, and criminals frequently hop between wallets. It would also raise ethical questions around whether one individual should make a judgement about who is allowed to use the service.
“I don’t think I should be in charge of deciding who the good and bad people are for everyone—and nor should anyone else,” says Soleimani. “This system is different because it allows individuals the choice of who they associate with or not.”
Soleimani says that Privacy Pools’ clients are likely to be people who want to make transactions privately—those who want to donate to political causes anonymously or conceal the size of their crypto-denominated salary, for example.
Even before the technical details were released, the project began receiving messages of support from the cypherpunk community, which advocates for the use of cryptography to safeguard personal privacy.
“Cypherpunks like privacy, institutions like privacy, casual investors like privacy,” says Thurman. “It will be warmly welcomed.”
“I’m sure it will be good, whatever he puts out there,” says Greg Di Prisco, formerly head of business development at MakerDAO, another prominent Ethereum-based DAO. “I do not think the average user understands just how bad the world will look without transaction privacy.”
As for whether US regulators are likely to be receptive to the idea, however, Soleimani says he is “not at all confident”—a feeling that’s shared within crypto circles.
The debate around crypto mixers highlights the “philosophical divide” between evangelists and regulators, according to crypto analyst Noelle Acheson, around whether financial privacy is a right. She predicts that regulators in the US are likely to treat any kind of mixer with suspicion because of the opportunity for misappropriation, even if only a small percentage of users are bad actors.
But the emergence of a successor to Tornado Cash, Acheson says, points to the difficulty regulators face in preventing similar tools from coming to market, which risks becoming an endless game of whack-a-mole.
Despite the headwinds, Soleimani says he hopes the project will come to represent a rare convergence of the interests of regulators and crypto evangelists—and will act as something of a “peace offering.” (OFAC did not respond to a request for comment.)
“My goal is to have a privacy tool that I can use, as an American citizen. This has always been my goal—it was the goal when we made Tornado Cash in the first place,” he says. “My friends and I think privacy is normal. Someday you will too.”